Nimble Abandons Mobile Payments Style Payday Lending in Australia
Whether it’s just to get a quick advance on next week’s pay to cover the shortfall on a big sale item, or it’s part of a complete economic plan that probably represents a bad idea walking, payday lending is a big deal. For Australian firm Nimble, however, it’s much less a part of its own operations, as it recently tipped us off that it was departing the field.
Nimble was actually one of the first—and one of the most successful—financial technology (fintech) operations in Australia, which gave it a particular credibility in the field. That, in part, allowed it to open up a range of high-interest short-term loans that made it ideal for payday lending operations.
With over 1.4 million small loans provided to over 300,000 individual Australians, it was proving quite successful. Indeed, Nimble got so good at it that it could actually assess creditworthiness in minutes and get the relevant cash to users within an hour. However, that business wasn’t enough for Nimble, as it pulled out in favor of launching a whole new line of credit products.
In fact, according to reports from the company, it has plans to become a “…full service and branchless digital bank,” according to its chairman Ben Edney. Backing Edney on this was CEO Gavin Slater, who noted: “While short-term lending has come under a lot of criticism for the high-interest rates associated with the sector, the reality is that the need is real and we would like to offer more affordable rates by reducing our cost of capital.”
Banks that focus entirely on apps, effectively becoming at least a kind of mobile payments tool, aren’t exactly new and unique anymore. However, they do still represent an excellent potential solution for the currently unbanked. Banks tend to enjoy branchless banking because it represents significant savings over opening and maintaining buildings. Customers are a little less tickled by this notion, however, so the launch of branchless banking has been comparatively slow to roll out.
Still, challenger banks have seen some noteworthy results until now, and Nimble already has excellent name recognition in Australia. It may well be able to succeed where more than a few before it have failed.